NCC, China sign cotton trade agreement

China’s textile manufacturing sector will continue to expand beyond the 50 million bales or more it now consumes annually but not at the same rate as in the past five years, the secretary general of the China Cotton Association says.

Madame Gao Fang, whose organization represents about 60 percent of China’s cotton industry, said China’s textile production probably will not continue to grow at 40 percent per year, a rate which has vaulted it into the position of being the largest cotton consumer in the world.

“In the last five years, China has seen very fast growth of the textile industry,” Madame Gao said through an interpreter. “That growth will not be as fast as before because of machinery availability, the cost of labor and the cost of borrowing.”

Madame Gao was responding to reporters’ questions following the signing of a Memorandum of Understanding between the National Cotton Council and the China Cotton Association at the Memphis Cotton Museum.

The Memorandum signals a “spirit of cooperation and good will,” said Allen Helms, NCC chairman and a cotton producer from Clarkedale, Ark., who signed the agreement on behalf of the Council.

While that is the goal of the agreement, Madame Gao indicated in her comments to editors and farm broadcasters that Chinese cotton buyers could continue to be the same tough negotiators they’ve been since China first began importing U.S. cotton more than two decades ago.

Asked about China’s previous issues with U.S. fiber quality, she said she had talked with members of the China Commodity Inspection Bureau and that the quality of the current crop is even lower than it has been in previous years.

She said Chinese textile mill officials continue to report packaging problems and short fiber content, two areas that have drawn chronic complaints from Chinese representatives for a number of years.

“But officials at Weigiao, the largest textile mill in China, told me the quality of the U.S. cotton it receives is improving,” she said.

When an editor asked if she would predict how much imports from the United States might increase over current totals, she noted that U.S. market share has actually been decreasing although total imports have been increasing.

While U.S. market share was at 60 percent of total imports three years ago, it now is running around 40 percent, she said. She also cited Uzbekistan and India as strong competitors for U.S. market share in China.

Nonetheless, she said she has “great confidence” that the cotton associations of the two countries will be taking their business relationship to a new level because of the Memorandum of Understanding.

“Chinese cotton leaders are prepared to move a step higher in the development of our relationship,” she said. “We believe the signing of this agreement means we are turning a new page of cooperation.”

National Cotton Council officials also have high hopes for the Memorandum of Understanding.

“Cotton trade with China is very healthy today as the United States exported 8.6 million bales or about 36 percent of its crop to China in the past 12 months,” said Helms. “This MOU is significant for the U.S. cotton industry as it seeks to build not only on that current momentum but on its long-time relationship with China.”